Luton International has production and marketing divisions throughout the world. It produces one particular product in Ireland, where the income tax rate is 25%, and transfers it to a marketing division in Japan, where the income tax rate is 47%. Assume that Japan places an import tax of 9% on the product and that import duties are not deductible for income tax purposes. The variable cost of the product is 200 and the full cost is 350. Suppose the company can legally select a transfer price anywhere between the variable and full cost. Read the requirements Requirement 1. What transfer price should Luton International use to minimize taxes? Explain why this is the tax-minimizing transfer price Luton is better off using a transfer price. That transfer price places an extra of income in where the taxes are lower than in 1 Requirements 1. What transfer price should Luton International use to minimize taxes? Explain why this is tax-minimizing transfer price. 2. Compute the amount of taxes saved by using the transfer price in requirement 1 instead of the transfer price that would result in the highest taxes. Print Done Luton International has production and marketing divisions throughout the world. It produces one particular product in Ireland, where the income tax rate is 25%, and transfers it to a marketing division in Japan, where the income tax rate is 47%. Assume that Japan places an import tax of 9% on the product and that import duties are not deductible for income tax purposes. The variable cost of the product is 200 and the full cost is 350. Suppose the company can legally select a transfer price anywhere between the variable and full cost. Read the requirements Requirement 1. What transfer price should Luton International use to minimize taxes? Explain why this is the tax-minimizing transfer price Luton is better off using a transfer price. That transfer price places an extra of income in where the taxes are lower than in 1 Requirements 1. What transfer price should Luton International use to minimize taxes? Explain why this is tax-minimizing transfer price. 2. Compute the amount of taxes saved by using the transfer price in requirement 1 instead of the transfer price that would result in the highest taxes. Print Done